Organizations, both large and small, often take for granted the data
communications networks installed in their facilities for the fast,
efficient, economical and reliable transfer of information. The
ever-increasing demand for sending this information faster and more
reliably has made data communications one of the fastest growing
segments in telecommunications.

The thirst for information accessed by datacomm systems users seems
to be unquenchable. According to Michael Tyler, president of
Communications Studies and Planning (CSP) International, "As
society has become increasingly information oriented, businesses have
been forced to rely on on-line data bases for fast electronic retrieval
of information. The growth of the on-line data base industry has been
one of the most dramatic economic success stories of recent years,
especially in light of the 1980 to 1982 recession. Between 1980 and
1983, the industry's annual revenues almost doubled. Revenue
projections for 1984 to 1991 for the leading market segments--credit,
economics/finance, legal--point to a continuation of growth, although
growth rates will fall as the market expands."

Taking 1983 as the base for its forecast, CSP International
projects that an average real-growth rate of roughly 13 percent per year
for the whole on-line information industry over the following seven
years will yield an industry with estimated annual revenues of $5.3
billion in 1991, expressed in 1984 dollars.

Good network design and management are the keys to coping with this
demand for information. This is not as easy as it may sound, especially
when considering all the changes going on in the telecommunications
industry. Deregulation, increased competition, the proliferation of
personal computers, local-area networks, integrated voice/data systems
and enhanced services (now being offered by the Bell operating
companies) have all converged to produced what is commonly known as the
multivendor environment, or in simpler terms, confusion.

Thrust into the center of this new world of telecommunications is
the communications manager, who is expected to develop budgets and
long-range plans in this volatile atmosphere. The telecom
manager's duty is to see that the benefits of data
communications--higher speed, increased reliability, more efficiency at
a lower cost--are there for the end-user . . . the one with the great
appetite for information.

Large users are finding that their data communication needs are
growing at a rate of 67 percent per year, and the wrong decision now
could mean by as early as 1988 these organizations could be bandwidth
starved, while paying more for data networking, according to the Yankee
Group. "Innovate in data communications or die," warns Howard
Anderson, managing director of the Boston-based market research firm.

Choosing the right datacomm gear to get the job done can be part of
the solution to insuring access to information. Unfortunately, the
number of products and services being offered to solve data
communications problems are increasing to the point where the selection
process becomes an additional problem. A look at the growth in this
area things won't be changing soon.

Leased Lines Transmission Mode of Choice

In a survey of data communications market trends done by
Newton-Evans Research Company on current and planned usage of available
technologies, leased lines were found to be the transmission mode of
choice. Leased lines dominate the data transmission scene, representing
about 70 percent of the data communications (transmission) investment
among companies surveyed. The Ellicot City, Maryland-based firm notes a
trend to decrease the reliance on private lines. By 1987, those
surveyed expect leased lines to account for only about 53 percent of the
total investment.

Dial-up lines (switched lines) accounted for about 21 percent of
the transmission investment among the organizations responding. By
1987, respondents believe that dial-up lines will account for over 18
percent of the budget.

The use of value-added networks (VANs) will reportedly increase to
more than twice the current level of usage, according to the survey.
Currently, VANs account for about 5.4 percent of the data communications
budget among firms that responded. By 1987 VANs are expected to account
for about 11.4 percent of the data communications budgets within these
firms.

The use of satellite services is also expected to grow
significantly over the 1984 through 1987 period. While currently
representing less than one percent of the datacomm budget within the
companies participating in the survey, the level is expected to increase
to a level of more than seven percent.

Microwave links account for about three percent of the datacomm
budget and will increase to about 8.6 percent of the budget of this
group of companies, Newton-Evans reports.

This group of survey respondents indicated that equipment accounted
for about 45 percent of the data communiations budget. Datacomm services
accounted for another 35 percent while staff resources consumed 20
percent of the budget.

The demand for equipment will stay strong for the foreseeable
future. One indication is the constantly increasing demand for modems.
In a report published by Frost & Sullivan, the modem market is
projected to have a value of $4 billion in 1988, up from 1984's
$1.18 billion.

According to the report, the data communications market encompasses
a complex mix of products that are constantly changing due to
technological advances. The report states that due to complexities and
technical intricacies, the application of digital technology to data
communications has been slow. But, the report continues, "in
future decades all modes of point-to-point communications will at
sometime be under the control of a digital processor." The New
York City-based research film predicts this will include all aspects of
voice and data transmission, storage and recording.

The report also predicts that the increased interest in data
communications will finally spur the real growth in local-area networks.
According to the Frost & Sullivan forecast, LANs will have a total
market value of $512 million in 1988, growing from 1984's $128
million market.

User need for more cost-effective and capable communications, newer
technologies offering a variety of options, declining equipment costs
and the proliferation of distributed systems have made the LAN market
one of the fastest growing segments of the computer industry according
to a report published by International Data Corporation.

The report says the development of cost-effective ways of linking
together previously disparate sources of information processing and
storage is seen as an essential step toward the goal of higher levels of
productivity through automation. IDC, headquartered in Framingham,
Massachusetts, claims that nearly every vendor of hardware, software or
communications equipment is now, or will be offering users a means to
implement such systems.

Not all telecommunications pundits agree on where LANs are going.
Datapro Research in New York City believes the growth of the LAN market
is stunted. Reasons given include end-user confusion, lack of
compatibility and new technologies. Datapro says that the future of the
market, which is forecast to reach $1.1 billion by 1990, is most
dependent on the technological savvy of the end-user.

Newton-Evans paints a mix picture for LANs. The company's
Sandra Klein says there are deficiencies as well as benefits with LANs.
"LANs have several drawbacks: they are costly; not all can
efficiently shape peripherals and files; and there are no standards to
ensure that they are able to communicate with other equipment on the
network."

The need to electronically exchange information, mix graphics with
text and share files and peripherals has forced many Fortune 500
companies to take a serious look at how they can cost-effectively
integrate these resources. For those with a large number of personal
computers that are already installed, LANs are available that can tie
them together," she reports. "For companies that don't
yet have a proliferation of personal computers, multi-user systems are
now available that offer personal computer features and shared
capability."

The advances made in both voice and data communications have led to
the integration of the two technologies. All indications are that
integrated voice/data systems will be one of the biggest growth areas in
communications through the 1990s.

According to a market study prepared by Advanced Resources
Development, a Medfield, Massachusetts consulting firm, 55,000 fully
integrated voice/data systems were shipped in 1984. The ARD data says
the number will increase to 370,000 lines in 1989. In dollar terms this
translates into a jump from $66 million in sales in 1984 to $330 million
in 1989. This unit and dollar shipment growth is expected to continue
beyond the study's five year forecast period. In the study, an
integrated voice/data system is defined as one that transmits both voice
and data traffic through a single switch or controller and over a common
or closely associated media.

Reasons given for this market growth include improvements in the
data-handling capabilities of the PBX, a boom in data communications
activity as a result of the computer revolution and information
explosion, and an increased interest on the user's part in
economizing on communications installations by using one system for
multiple kinds of traffic. Users are beginning to realize that this
simplified network could combine the best of both telecommunications and
data communications technologies.

There is some confusion as to what technology is best suited for
the job of accessing information via data communications. A survey of
US businesses conducted by Venture Development Corporation, a Wellesley,
Massachusetts market-research firm, found a great deal of confusion in
the minds of non-owners of workstations as to product capabilities and
industry participants. The same survey found that close to 36 percent
of non-owners are currently considering the purchase of workstations.
Of this group of people, over one fifth actuall intend to purchase
workstations within the next year.

BOCs Offer Enhanced Services

One of the biggest changes to affect data communications was the
FCC's decision early last March to give the Bell operating
companies (BOCs) waiver of Computer II structural separation
requirements so they can perform conversion from asynchronous protocols to X.25 packet-switched network protocols in facilities located in their
central offices.

Protocol conversion, including asynchronous/X.25 conversion, is
included within the definition of enhanced services under the Computer
II rules. The BOCs are permitted conversion, but only thrugh a
structurally separate affiliate using its own separate processing
facilities. any communications channels necessary to provide an
enhanced service must be acquired by the subsidiary pursuant to tariff.
As long as the subsidiary conforms to the Computer II separation
requirements, it need not obtain the approval of the commission to offer
any enhanced services.

The separate subsidiaries are therefore free to provide
asynchronous/X.25 conversion, in the same way as the VANs providers and
other enhanced service vendors provide similar services.

The BOCs, however sought to offer asynchronous/X.25 conversion
through their operating companies' affiliates, in conjunction with
existing or proposed basic packet-switching services. This approach was
found to be inconsistent with the structural separation requirements of
Computer II. This led to the BOCs requesting waiver of the Computer II
rules to allow this particular protocol conversion service to be
provided on an unseparated basis.

The commission concluded that the BOCs have adequately demonstrated
that the public interest would be served by allowing them to provide the
enhanced service of asynchronous format-compatible packet-switched data
transport, using asynchronous/X.25 conversion in facilities co-located
with their central office. It said this would result in lower prices to
consumers and, over time, real efficiencies in use of exchange and
interexchange facilities, making unnecessary additional construction of
facilities, the costs of which could raise local telephone rates.

On the following pages CN takes a closer look at data
communications with feature articles on specific applications for
datacomm products and services, and a round-up of products and services
available to users.

COPYRIGHT 1985 Nelson Publishing
No portion of this article can be reproduced without the express written permission from the copyright holder.